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Special Report

Construction Industry Moves to Stem the Theft Tide

Insurance companies and machine-tracking vendors offer contractors incentives to stop equipment thieves

November 1, 2006

By Larry Stewart, Executive Editor


Precious few police officers are construction-equipment specialists, and multiple locations on machines for product identification number (PIN) plates makes investigating machines in suspicious situations particularly challenging. PINs can be found in at least seven different positions on skid-steers, for example. Inviting police officers to your equipment yard or project site to learn about PIN plates can pay off handsomely if your machines are ever stolen. Source: NER
The percentage of contractors' equipment stolen from others' premises grew 10 points from 2000 to 2004. But work sites are so transitory that it may not be feasible to adequately secure them.
The two keys to determining the type of equipment most likelyto be stolen are value and mobility. The higher the value of an item and the easier it is to transport, the greater the chance of theft. Dozers and wheel loaders are the most valuable equipment among the 10 most-stolen machines, but skid-steers and backhoe-loaders are easier to transport.

Fifth Time Stolen Yields Arrest Monday morning a construction crew arrived at a work site on I-10 in West Chambers County, Texas, to find that numerous construction tools, generators, and equipment had been stolen, including a 2001 Miller Bobcat welder. The foreman, knowing the welder is LoJack equipped, immediately called the Chambers County Sheriff Department and filed a theft report. The Deputy completed the theft report and entered the welder's product identification number (PIN) in the state and national crime computer. This activated the LoJack device hidden on the welder and it began to transmit a radio signal. Fifteen minutes later, a Texas State Trooper picked up the signal on his LoJack police tracking computer. After obtaining a complete description of the welder and calling for backup, the signal led officers to a private residence where it appeared to come from the garage. Officers approached the owner of the residence and questioned him. The suspect stated: "Come on in, I'm sure what I purchased this weekend is stolen." The suspect then opened the garage and showed officers the welder and several other items he had purchased. Officers called the district attorney's office and were advised to file any and all charges related to the theft. Recovered property was identified as that stolen in the burglary of the I-10 site. It is the fifth time this welder has been stolen and recovered with LoJack.

Stolen Backhoe Stopped at Border An inspector with United States Customs & Border Protection in Laredo, Texas, was suspicious of the export documentation being submitted for a Case 580 Super L being taken into Mexico. The machine's product-identification number yielded no matches on police computers so the inspector contacted NER for additional information before letting the backhoe cross the border. NER searched internal databases and found an ownership record for the backhoe. The owner was contacted and confirmed that the backhoe was his, but he said there was no reason it would be headed into Mexico. The owner then checked his yard and confirmed that the backhoe was missing. The unit was seized and returned to the owner.

GPS Busts New Mexico Theft Ring Under the protection of night, three thieves crept into a quiet jobsite off US Highway 550. When their target — a John Deere 310SG — didn't start, they suspected a master disconnect switch was the obstacle. They left the jobsite for cables to wire around the disconnect switch, returned and wired across the battery, got the backhoe running and began driving it down the street, with their white GMC truck close behind. Less than a mile from the site, several police cruisers performed a felony stop on the backhoe and truck, catching the thieves red handed. When owner Bill Joiner arrived, the three thieves were handcuffed and lying on the ground. Joiner has DPL America's Titan system installed on the backhoe-loader. Titan's disabling feature stalled a routine 20-minute theft into an hour and a half effort. During that extended process, a number of silent alarms alerted Joiner employees and the police. Titan's GPS located the machine on a street-level map, making it easy for authorities to intercept the criminals. Police found a cluster of universal keys for nearly every make of machine as well as burglary tools in the GMC truck. The truck itself was stolen. A scan of the backhoe revealed that the thieves had already painted over all Joiner Construction identifying marks and decals. Fortunately, the leader of this organized crime ring was one of the suspects apprehended.

Companies Paying to Prevent Theft Insurance companies are beginning to offer incentives in the form of waived deductibles and premium discounts to policy holders if they will take steps to improve law enforcement's chances of recovering stolen equipment. Here are some that can save you money on insurance and theft prevention. American Resources — www.aric.cc 20 percent discount of NER fees Waiving $5,000 of its deductible AIS — www.ararental.org Paying NER fees to register policy holders' equipment Registers machines for customers Chubb Group — www.chubb.com Policy holders register 10 machines with NER at no cost, additional units at a 20 percent discount Waiving $10,000 of its deductible Fireman's Fund — www.the-fund.com 20 percent discount of NER fees Offering 2 percent rate credit Waiving $10,000 of its deductible The Hanover — www.hanover.com Waiving $10,000 of its deductible Leavitt Group — www.leavitt.com Policy holders that use DPL America's Titan telematic system get premium reductions of 20 to 50 percent Rue Insurance — www.rueinsurance.com Paying NER fees to register policy holders' equipment Registers machines for customers United States Liability Insurance Group — www.usli.com Paying NER fees to register policy holders' equipment Registers machines for customers Qualcomm — www.qualcomm.com Paying NER fees to register GlobalTRACS customers' equipment Registers machines for customers Each of the insurers below is discounting premiums for policy holders using LoJack systems on construction equipment, and waiving deductibles if a LoJack-equipped machine is stolen and not recovered: The Hanover — www.hanover.com Progressive — www.progressive.com St. Paul Travelers — http://www.stpaultravelers.com

Buying Used: Is It Hot? Less than 10 percent of stolen equipment is recovered — encouraging thieves with a 90 percent chance of success. Low recovery is due in part to a lack of ownership checks during used-equipment purchases. Here are some places you can go, in addition to local equipment dealers, with a machine's product identification number (PIN) to find out if it has been reported stolen. National Equipment Register (NER), (866) NER-TIPS CatUsed.com Bobcat, (701) 678-6165 Ontario Sewer and Watermain Construction Assoc.

GPS Sees Where People Can't Two days after a Chicago-area contractor took delivery of a $42,000 skid-steer loader, it was stolen from his jobsite. The skid-steer carried a Qualcomm GlobalTRACS unit that tracked it using global positioning system (GPS) satellites to a local forest preserve. The police officer on the case walked through the heavily wooded park but couldn't find the loader. He went into a nearby sporting goods store and bought a GPS receiver like the one hikers use. The officer called Qualcomm to get the GlobalTRACS unit's exact latitude and longitude, then walked to those coordinates. There he discovered that the thieves had used the skid-steer loader to dig a large hole, drove the machine into it and camouflaged it with tree branches.

For years the National Insurance Crime Bureau (a non-profit group dedicated to combating insurance fraud and vehicle theft) estimated that $1 billion worth of construction equipment and tools are stolen each year. But it seemed nobody felt the pinch acutely enough to take decisive action against equipment thieves.

Equipment owners had grown accustomed to the cost of theft. Indeed, Construction Equipment readers were so inured that they valued theft losses not much greater than the deductible costs on insurance claims, according to research conducted by the magazine.

It's really no surprise that equipment theft is a problem.

Construction equipment is valuable. Skid-steer loaders — the most mobile construction machines and probably the most commonly stolen — can sell for more than $50,000.

There's low risk of being caught. The recovery rate for stolen cars is better than 60 percent, but less than 10 percent of stolen construction equipment is recovered.

Equipment is easy to steal. There is very poor security on work sites and machines. Sites are often large spaces in remote areas, or private property (few witnesses). Machine ignition switches don't require unique keys to start.

Equipment is easy to sell. Ownership records of precious few used machines are checked before sales. With the risk of being caught so low, many people who would normally not be prospects for buying hot iron are enticed, eager to gain bidding advantages.

Security-device vendors started to show interest in construction equipment markets during the boom of the late 1990s. Presented with working solutions to the easy theft of construction equipment, insurers supported some of them in an effort to reduce payouts from theft losses.

For example, when stolen-vehicle-recovery firm, LoJack, made its first forays into the construction-equipment industry early in the decade, St. Paul Travelers insurance bought 5,000 LoJack devices. They seeded the fleets of high-risk policy holders with the tracking devices. (LoJack's radio network is currently operating in 26 states and the District of Columbia, as well as in 27 countries throughout Europe, Africa, Latin America and Asia.)

"They're not doing that any more, but they're seeing their original investment returned four to five times because those 5,000 LoJack units keep recovering pieces they're mounted on," says Kathy Kelleher, national manager of LoJack's Commercial division. "And those St. Paul customers are continuing to buy LoJack, adding them to more of their fleets."

Still, the insurance industry seemed to lack the collective will to mount widespread efforts to resist thieves. It seems the pain of paying for equipment theft was diffused too broadly, and its severity was too poorly measured for anyone to take on such an intractable problem.

A comparison with car theft illustrates the severity of the challenge in fighting construction-equipment theft. Because current-model cars are so universally insured and/or owned and driven by individuals, most car thefts are reported to the police immediately. Self-insured contractors may not report some machine thefts, particularly those th